C3 


BANCROFT 
LIBRARY 

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THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 


EXPENSES  OF  THE  WAR. 


i  BY   ALBERT   GALLATIN. 


1295  CALiF.  U.  BANQiQF 


I.  There  are  in  political  economy  many  debatable,  doubtful,  and  complex  propositions,  some  of 
which  it  may  be  impossible,  most  of  which  it  would  be  extremely  difficult,  to  discuss  in  a  popular 
and  generally  intelligible  manner.  But  there  are  some  which  every  member  of  the  community  may 
bring  home  to  himself  and  clearly  understand.  Among  these  may  be  counted  the  acquisition  and 
application  of  capital. 

Every  man  who  enjoys  a  certain  income  knows  that  he  will  grow  poorer  if  he  spends  more,  and 
richer  if  he  spends  less,  than  the  amount  of  that  annual  income.  •  In  the  first  case,  he  loses  part  of 
his  capital :  in  the  other  he  acquires  a  new  capital.  Every  man  who  earns  his  living  by  his  indus 
try  and  labor,  whatever  this  may  be,  knows  perfectly  well  that  if  he  spends  annually  less  than  he 
earns,  the  difference  is  an  acquisition  of  capital.  The  journeyman  who  in  the  course  of  the  year  is 
able  to  .put  forty  dollars  in  a  Savings  Bank  understands  this  as  well  as  the  most  profound  political 
economist. 

In  every  instance  capital  is  produced  by  labor,'and  is  equal  to  the  excess  of  that  which  is  pro 
duced  over  and  above  the  amount  which  is  consumed.  It  is  obvious  that,  since  this  is  true  of  every 
.individual,  it  is  equally  true  of  the  aggregate  of  individuals  who  compose  the  nation.  The  acqui 
sition  of  capital,  or  increase  of  wealth,  of  the  United  States  is,  in  any  one  year,  equal  to  the  excess 
•of  the  value  of  the  productive  labor  of  the  people,  over  and  above  the  value  of  that  which  they  have 
consumed  during  that  year.  The  whole  capital  of  the  United  States  has  been  produced  by  the  ac 
cumulated  aggregate  of  that  annual  excess  of  value  produced  over  value  consumed. 

However  great  this  may  be,  it  has  generally  been  inadequate  to  the  demand.  In  order  that  land 
may  be  productive,  labor  must  be  applied  to  it.  In  the  forest  land,  which  constitutes  probably  nine 
teenth-twentieths  of  that  which  has  as  yet  been  cultivated,  it  is  in  the  first  place  necessary  to  clear  the 
land  of  trees  and  to  enclose  it.  The  average  price  of  this  amounts  to  four  or  five  dollars  rer  acre.  It 
is  clear  that  this  first  outlay,  the  cost  of  the  humblest  dwelling,  and  of  absolutely  necessary  agricul 
tural  buildings,  as  well  as  that  of  horses  and  cattle,  require  a  previously  existing  capital.  It  must 
moreover  be  recollected  that  the  ordinary  products  of  agricultdre  are  not  realised  till  after  the 
crop.  The  laborer,  who  has  no  capital  whatever,  must  be  supported,  and  his  wages  advanced 
to  him  by  his  employer.  The  population  of  the  United  States  has  heretofore  increased  at  the  rate 
of  about  thirty-three  per  cent,  in  ten  years ;  and  there  has  been  therefore  a  proportionate  and  an 
nually  increasing  demand  for  capital  for  agricultural  purposes  alone. 

At  the  time  when  America  was  first  settled  by  British  colonists  the  lands  in  England  were  en 
closed,  fitted  for  cultivation,  stocked  with  horses  and  cattle,  and  the  country  covered  with  every 
species  of  necessary  buildings,  including  dwelling  houses.  America,  in  every  such  respect,  was 
a  blank.  The  first  colonists  brought  with  them  but  a  very  small  amount  of  capital,  and  pro 
portionate  to  their  numbers.  All  that  large  amount  of  fixed  and  personal  capital,  of  which  England 
was  possessed,  the  product  of  the  surplus  labor  or  capital  accumulated  during  centuries,  the  Ameri 
can  colonists  had  to  create  by  their  own  industry  and  labor. 

A  single  item  may  be  adverted  to.  The  number  of  dwelling  houses  has  necessarily  been  in 
creased,  in  proportion  to  the  increase  of  population.  In  the  city  of  New  York,  for  instance,  where 
the  population  has  been  increased  tenfold  in  fifty  years,  the  number  of  houses  which  were  built  more 
than  fifty  years  ago  is  extremely  small,  and  much  less  in  value  than  that  of  houses  built  since  that 
date,  which  have  been  subsequently  pulled  down  or  destroyed.  The  whole  cost  of  the  dwelling- 
houses  now  existing  in  New  York,  which,  alter  deducting  the  nominal  value  of  the  lots,  may  be 
estimated  at  about  one  hundred  millions  of  dollars,  has  been  defrayed  by  the  capital  acquired  during 
the  last  fifty  years.  The  same  process  has  taken  place  not  only  in  every  town  and  village,  but 
throughout  the  whole  country.  As  a  whole,  the  general  result  has  been  much  less  in  proportion 
than  in  New  York,  since,  during  that  period,  the  population  of  the  United  States  at  large  has  only 
-been  quadrupled.  It  seems  probable  that  the  whole  amount  of  capital  absorbed  in  the  United  States 
in  that  way,  during  that  period  of  fifty  years,  does  not  fall  much  short  of  $1500,000,000. 

The  whole  of  that  capital,  whatever  its  amount  may  be,  has  not  been  yet  actually  expended, 
since  the  houses  do  exist ;  but  it  has  been  applied  to  an  unproductive  object.  It  is  clear  that  no 
man  who  lives  in  his  own  house  derives  any  revenue  from  it.  It  is  a  portion  of  that  which  he 
snds  for  his  own  comfort,  and  which,  independent  of  wear  and  tear,  is  equal  to  the  interest 
o^t  the  capital  laid  out  in  building  the  house.  If  a  man  lets  his  house,  instead  of  enjoying  it  for 
his\T\vn  use,  he  receives  a  rent  equivalent  to  that  interest.  But  the  person  who  occupies  the 
house^nr  part  of  it,  and  who  pays  that  rent,  does  not  derive  the  means  of  paying  it  from  the  house 
itself,  buvfrcm  his  own  income  or  labor.  Thus  in  every  instance,  though  forming  an  important  and 
necessary  potion  of  the  fixed  capital  of  the  nation,  dwelling  houses  are  unproductive,  and  a  portion 
of  the  consumption,  and  not  of  the  income  of  the  nation. 

Tower  sprinter,  opposite  A  <  ncer  office. 


Taking  all  these  facts  into  consideration,  it  will  be  easily  understood  why  the  acquisition  of 
Circulating  capital  has  been  so  slow  in  the  United  States,  and  why  they  were  obliged  to  depend 
so  long  on  the  aid  afforded  by  foreign  capital.  At  the  time  when  independence  was  declared, 
and  for  more  than  thirty  years  after,  America  was  always  in  debt  to  Great  Britain.  Even  now 
the  amount  of  accumulated  circulating  capital  is  comparatively  small  and  inadequate  to  supply 
the  ordinary  demand  for  it.  In  almost  every  instance  the  funds  necessary  to  carry  into  effect  ex 
tensive  plans  of  improvement,  whether  rational  or  wild,  have  been  borrowed  abroad  ;  and  there 
is  now  a  large  debt  due  to  foreigners,  principally  to  British  subjects,  due  not  by  individuals,  but 
£y  several  of  the  States.  It  is  doubtful  whetjier,  pending  the  war  with  Mexico,  the  Government 
of  the  United  States,  notwithstanding  their  unimpeached  credit,  could  obtain  any  considerable 
loan  at  par  for  a  six  per  cent,  stock.  Hence  it  is  that  the  destruction  of  circulating  capital,, 
caused  by  the  war  expenses,  is  already  sensibly  felt. 

A  merchant,  having  full' confidence  in  the  probity  and  skill  of  a  man  who  has  no  property, 
Bells  him  on  credit  merchandise  worth  five  thousand  dollars;  the  goods  are  delivered,  and  on  the 
same  day  are  burnt,  or  otherwise  destroyed,  by  some  uifforseen  accident.  In  this  case  there  is  no 
capital  left  which  represents  the  debt.  There  remains  only  a  promise  to  pay,  from  a  man  who 
has  no  property  whatever.  In  order  to  discharge  the  debt,  he  must,  by  his  subsequent  labor  and 
frugality,  acquire  a  new  capital.  •  « 

The  same  result  attends  war  expenses,  and  for  the  same  reason;  the  capital  thus  expended  has 
been  destroyed. 

The  public  debt  of  Great  Britain  may  amount  to  about  eight  hundred  millions  sterling  ;  and 
there  is  no  existing  capital  which  represents  that  debt.  The  creditors  hold  only  a  promise  to  pay,. 
the  interest  of  which  they  receive  regularly.  This  payment  of  interest,  and  general  confidence  in 
the  good  faith  of  Government,  give  current  value  to  the  public  stocks  or  promises  to  pay.  But  the 
Government  has  no  capital  wherewith  to  pay  either  the  principal  or  interest.  In  order  to  do  either, 
taxes  must  be  laid  on  the  people  at  large.  The  people  must,  by  their  own  labor  and  industry, 
create  a  new  capital  for  that  purpase.  The  amount  of  the  public  debt  is  equivalent,  not  to  the 
whole,  but  to  the  most  considerable  portion  of  the  capital  which  has  been  destroyed  by  the  wars 
in  which  Great  Britain  has  been  involved.  Yet  not  to  the  whole,  since,  in  order  to  include 
the  whole  amount  of  capital  destroyed  by  those  wars,  there  must  be  added  to  the  public  debt  incurred 
all  the  war  taxes  raised  and  expended  for  the  same  purpose. 

The  preceding  observations,  though  illustrated  by  the  example  of  Great  Britain,  are  equally 
applicable  to  the  United  States.  Almost  the  whole  capital  applied  to  war  expenses  is  destroyed , 
because  it  is  expended  on  unproductive  objects.  The  munitions  of  war,  horses,  aud  a  multitude 
of  other  articles,  are  actually  destroyed  ;  a  variety  of  other  expenses,  such  as  those  of  transport 
ing,  and  afterwards  of  moving  an  army  with  all  its  apparatus,  particularly  if  in  a  foreign  coun 
try,  are  entirely  lost.  The  great  bulk  of  the  moneys  raised  for  carrying  on  war  is  expended  in 
feeding,  clothing,  and  supporting  men  whom  the  war  has  converted  into  unproductive  consumers;, 
all  of  whom,  before  that,  earned  enough  by  their  labor  at  least  to  subsist ;  and  most  of  whom 
did  produce  a  surplus  over  and  above  their  personal  expenses.  At  the  end  of  the  war,  nothing 
remains  but  the  artillery,  muskets,  and  tents.  Ail  the  rest  of  the  capital  expended  for  the  land 
forces  has  been  annihilated. 

I  do  not  p'erceive  that  any  deduction  can  be  made  from  that  aggregate,  other  than  the  profits 
of  contractors,  and  in  some  cases  those  of  persons  employed  in  producing  or  manufacturing  that 
part  of  the  supplies  which  is  drawn  from  home. 

But  whatever  may  be  the  case  in  other  countries,  it  does  not  appear  that  any  deduction  should  be 
made  in  the  United  States  on  account  of  the  moneys  earned  by  men  who  may  have  been  employed 
in  furnishing  certain  supplies.  There  is,  in  the  United  States,  a  constant  demand  for  capital  and 
labor,  to  b«  applied  to  productive  purposes.  Every  able-bodied  man,  whether  cultivator  of  the  soil,. 
mechanic,  or  laborer,  can,  in  the  United  States,  obtain  remunerating  wages;  and  therefore  every 
man  employed  in  preparing  war  supplies,  for  instance,  in  building  war  steamers,  or  olher  ves 
sels,  ha*  been  diverted  from  some  analogous  employment  which  would  have  been  applied  to 
productire  objects. 

It  it  not  without  a  painful  feeling  that  we  are  compelled  to  admit  that  these  consequences  of 
the  Mtxiean  war  on  the  fiscal  arid  commercial  concerns  of  the  nation  have  heretofore  been 
greatlf  ailefimted  by  the  dreadful  calamity  which  has  effected  Europe,  and  especially  the  British 
Islea.  A  famine,  caused  by  the  failure  of  one  important  crop,  and  by  a  diminution  in  those  of" 
other  article*  of  food,  suddenly  increased  our  exports  to  an  unparalleled  amount,  far  exceeding 
in  valu*  tfc*  foreign  merchandise  usually  wanted  by  the  United  States,  and  causing,  accordingly, 
not  onlf  an  increase  of  dutiable  imports  and  .revenue,  but  also  an  extraordinary  influx  of  specie. 
Thifl  gentral  increase  of  wealth  had,  among  other  effects,  enabled  Government  to  carry  on  the 
war  vrithout  it*  erils  being  immediately  felt. 

But  th*  •ause*  *hich  had  produced  that  state  of  thing  have,  at  least  for  the  present,  ceased  to  operate. 

II.  Tht  preceding  observations  are  of  a  general  nature.  The  first  subject  of  special  inquiry  is. 
the  amount  of  the  actual  receipts  and  expenditures  since  the  commencement  of  the  war. 

All  the  receipts,  whether  arising  from  revenue,  loans,  or  any  other  source,  are  paid  into  the 
Treasury,  and  therefore  known  to  the  Secretary  of  that  Department.  He  is  also  responsible  for 
the  disbursements  by  his  own  Department,  the  most  important  of  which  are  those  which  relate 
to  the  public  debt.  But  with  respect  to  the  moneys  expended  by  the  other  Departments,  the 


3 

statements  of  the  Secretary  of  the  Treasury  on!y  show  the  amount  received  by  each  from  the 
Treasury.  These  never  can  exceed  that  for  which  appropriations  have  been  made.  The  Sec 
retary  is  bound,  provided  the  receipts  are  adequate,  to  pay  to  each  Department  the  sum  appro 
priated  for  its  use,  and  under  the  several  h^eads  of  the  respective  appropriations.  But  he  is  in 
no  degree  responsible  for  the  manner  in  which  the  moneys  have  been  expended  by  any  other  de- 
,  partment  than  his  own. 

In  ordinary  times,  in  times  of  peace,  the  expenses  of  each  Department  corresponds  so  nearly 
with  the  appropriations  that  the  statement  of  the  Secretary  of  the  Treasury  of  the  moneys  paid 
by  him  to  each,  gives  to  the  public  a  very  approximate  view  of  the  actual  expenditures.  The 
deficiencies  for  which  additional  appropriations  may  be  asked  from  Congress  are  generally  incon 
siderable.  But  in  time  of  war  it.  becomes  necessary,  in  order  to  ascertain  the  real  amount  of 
expenditures,  to  recur  to  the  reports  of  the  War  and  Navy  Departments.  Neither  can,  indeed,  pay 
more  than  the  amount  appropriated  ;  but  more  may  be  expended,  and  for  the  difference  a  debt 
may  have  been  incurred. 

The  Secretary  of  the  Treasury  is  in  the  same  manner  responsible  for  the  correctness  of  his  esti 
mates  of  receipts.  But  with  respect  to  those  of  expenditures  by  any  other  Department  than  his, 
own,  he  only  transmits  those  prepared  by  each  Department,  for  the  correctness  of  which  each  is  res 
pectively  responsible. 

Fiscal  year  ending  June  30,  1847.  f 

'1  his  is  almost  identic  with  the  first  year  of  the  war.  The  Secretary  of  the  Treasury  had,  in  his 
report  of  December  9,  1846,  estimated  the  war  expenses  for  that  year — 

Paid  during  first  quarter $ 8,153,659 

Estimates  for  the  three  last  quarters 19,579,438 

$27,733,097 


In  his  report  of  December  8,  1847,  he  states  the  receipts  and  expenditures  for  the  same  year  as 
follows,  viz : 

RECEIPTS. 

From  customs $23,747,864  66 

From  public  lands 2,498,355  20 

From  miscellaneous  sources 100,570  51 

From  avails  of  Treasury  notes  and  loans. 25,679,199  45 


Total  receipts 52,025,989  82 

Add  balance  in  the  Treasury  July  1,  1846. 9,126,439  08 


Total  means 61,152,428  90 

The  expenditures  during  the  same  fiscal  year  were 59,451,177  65 

Leaving  a  balance  in  the  Treasury  July  1,  1847,  of. $1,701,251  25 

as  appears  in  the  detail  by  accompanying  statement  A. 

I  have  used  in  vain  every  endeavor  to  obtain  a  copy  of  this  statement  A,  in  order  to  ascertain  the 
details  of  the  expenditure,  of  which  the  gross  amount  alone  is  given  in  the  text  of  the  report.  It 
will  be  found  in  that  volume  of  the  documents  which  contains  the  report  of  the  Secretary  of  the 
Treasury,  with  the  documents  relative  thereto,  and  which,  at  the  latest  dates  from  Washington, 
was  yet  in  the  hands  of  the  printer.  Having  seen  the  corresponding  statement  for  some  former 
years,  it  appears  to  me  that  the  substance  may,  without  adding  more  than  eight  or  ten  lines,  and 
should,  therefore,  be  inserted  in  the  text  of  the  report  of  the  Secretary.  This  is  always  published 
immediately  >  inserted  in  all  the  principal  newspapers,  and  read  by  every  body.  The  explanatory 
statement  A,  is  found  among  the  mass  of  documents  which  are  printed  several  weeks  later,  have  a 
very  limited  circulation,  and  are  hardly  read  by  any  body. 

The  report  of  the  Secretary  of  War,  dated  December  2,  1847,  contains  no  general  statement  of 
the  expenses  incurred  in  his  Department.  It  is  only  from  the  voluminous  documents  annexed  to  the 
report  that  the  necessary  information  can  be  extracted.  The  reports  of  the  Quartermaster  General, 
of  the  Paymaster  General,  of  the  Ordnance  department,  of  the  Adjutant  Genera),  are  documents  of 
great  merit,  of  perspicuous,  condensed,  and  apparently  as  correct  as  could  possibly  have  been  ex 
pected.  The  Commissary  General  of  Subsistence  may  be  entitled  to  the  same  praise  ;  but  I  have 
not  discovered  any  document  stating  the  amount  of  his  receipts  and  expenditures  for  the  year  end 
ing  30th  June,  1847.  I  have  indeed  been  supplied  from  a  respectable  source  with  the  amount  of  his 
expenditures  for  the  year  in  question ;  but  I  have  not  been  able  to  discover  the  document  from 
whic\this  amount  was  extracted.  / 

The \nort  of  the  Quartermaster  General  is  the  most  important.     The  receipts  were 

Balance  o\handon  July  1,  1846 $380357  72 

Remittances^ .'.V.V.'.'.V.V.20,724;555  32 

Miscellaneous  ;v. 96,511  14 


Gross  amount,. ,,,.V ; , < 21,701,424  18 


Expenditures  occurred  in  the  preceding  fiscal  year 28,012  98 

Money  refunded  to  the  Treasury  and  cancelled  drafts 25,017  00 

Expenditures  during  the  year  for  which  accounts  rendered 12,327,348  74 

Lieut.  Col.  Hunt's  accounts  for  3d  and  4th  quarters 2,414,039  00 

Balance  to  be  accounted  for 6,897,006  46 


$21,701,424  18 

Of  this  balance,  between  three  and  four  millions  of  dollars  were  not  received  by  the  disbursing 
officers  till  some  time  after  the  close  of  the  fiscal  year,  though  the  whole  was  for  accounts  and 
claims  accrued  within  the  year. 

Apparent  balance,  as  above  stated t $6,897,006  46 

Deduct  on  this  account,  say 3,497,006  46 

Leaves  to  be  accounted  for  only $3,400,000  00 

And  this  must  have  been  absorbed  by  the  following  items  of  expense,  of  which,  as  stated  by  the 
Quartermaster  General,  no  accounts  had  as  yet  been  rendered,  viz.  the  expenses  of  General  Scott's 
army  for  more  than  two  months  after  leaving  Vera  Cruz  ;  similar  expenses  of  the  Deputy  Quarter 
master  attached  to  General  Taylor's  army  for  the  whole  year,  and  those  at  the  St.  Louis  depot  for 
three  quarters. 

The  tofal  expense  for  this  branch  was,  therefore,  during  the  year  ending  30th  of  June,  1847 — 

Total  amount  received „ $21,701,424  18 

Deduct,  applied  to  the  payment  of  old  accounts $38,012  98 

Refunded  to  the  Treasury 25,017  00 

63,029  98 

Apparent  expenditure , 21,648,394  20 

The  Quartermaster  General  observes  that  the  estimates  presented  for  the  service  of  the  next  year 
are  minimum  estimates ;  and  he  thinks  they  might  be  reduced  by  cutting  off  North  Jrom  South 
Mexico,  erecting  the  States  of  the  North  into  a  separate  confederacy,  under  the  protection  of  the 
United  States;  and  by  organizing  South  Mexico,  as  conquered,  into  Governments  under  officers  of 
the  United  States. 

General  Jesup  is  a  most  capable,  energetic,  and  efficient  Quartermaster.  He  had  prodigious  dif 
ficulties  to  encounter  in  transporting  an  army  of  30,000  men,  with  so  little  previous  preparation, 
across  the  sea  to  a  distant  country :  and  he  has  surmounted  all  the  obstacles.  It  is  not  necessary 
to  discuss  his  politico-military  plans,  which  do  not  seem  to  coincide  with  the  avowed  declarations 
of  the  President ;  and  I  differ  widely  from  him  as  to  what  would  be  a  peace  glorious  to  the  country 
and  the  age. 

The  Paymaster  General  reports : 

Balance  on  hand  on  July  1,  1846 $938,047  40 

Received  from  the  Treasury  and  othex  sources 8,578,209  12 

, 

9,516,256  52 

Expended,  paying  regular  troops $1,941,756  84 

Do.         do.      volunteers 5,723,273  51 


7,665,030  35 

Do.        do.      Military  Academy 87,35999 

7,752,290  34 


Balance  on  1st  July,  1847,  to  be  applied  to  future  payments 1,763,866  18 

As  .the  balance  on  hand  amounted,  on  1st  July,  1846,  to 938,047  40 

The  unexpended  balance  had  increased $825,818  78 

The  Paymaster  General  further  states  that  the  deputy  paymasters  with  the  armies  of  Generals 
Scott  and  Taylor  had,  in  the  month  of  October,  reported  that  those  troops  had  been  paid  to  August 
31.  From  the  tenor  of  the  report,  it  is  presumed  that  this  payment  was  not  included  in  the  above- 
mentioned  sum  of  $7,665,030  35  ;  but  that  this  has  been  sufficient  for  the  entire  pay  of  the  regulars 
and  volunteers  for  the  whole  fiscal  year. 

The  reports  from  the  Ordnance  Department  are  very  complete.  But  a  great  portion  of  the  sup 
plies  for  the  use  of  the  army  in  the  field  consisted  of  articles  such  as  a  park  of  artillery  (150  pieces)  and 
37,000  muskets,  which  will  not  be  consumed.  The  whole  of  the  ammunition,  a  variety  of  accoutre 
ments,  and  probably  a  deficiency  or  deterioration  of  muskets  and  some  other  species  of  arms,  con 
stitute  the  portion  of  ordnance  supplies  which  has  been  consumed.  The  value  of  these  articles  ic 
not  given. 

The  peace  establishment  of  the  Navy  authorized  the  employment  of  7,500  petty  officers,  seamen, 
and  boys.  The  number  has  been  increased  to  10,000  during  the  continuance  of  the  war  with  Mex 
ico  ;  and  the  gross  amount  of  expenses  has  increased  in  about  the  same  ratio.  But  a  great 


portion  of  the  increased  expenditure  has  been  applied  to  the  building  or  purchasing  steam  and  other 
vessels,  and  to  other  items  of  permanent  value.  The  pay  and  subsistence  of  the  additional  men,  the 
wear  and  tear  of  a  greater  number  of  vessels  in  actual  service,  and  the  loss  of  some  small  vessels, 
seem  to  be  the  only  items  which  may  be  fairly  charged  to  the  Mexican  war. 

Without  pretending  to  give  anything  more  than  a  rough  approximation,  I  should  think  that  the 
additional  annual  expenses  for  ordnance  supplies  and  in  the  Navy  Department  do  not  together  ex 
ceed  two  millions  of  dollars. 

As  far,  therefore,  as  may  be  inferred  from  the  statements  furnished,  it  would  appear  that  the  total 
amount  expended  during  the  fiscal  year  ending  June  30,  1847,  for  the  army  proper,  including  both 
regulars  and  volunteers,  is  nearly  as  follows,  viz  : 

Quartermaster  General $21,648,394  20 

Paymaster 7,665,000  00 

Subsistence,  estimated 3,870.890  56 

Surgeons 65,000  00 

Ordnance  and  navy, estimated ..' '..  2,000,000  00 

$35,249,284  76 

The  approximate  correctness  of  this  estimate  is  corroborated  by  the  amount  of  the  appropriations 
for  the  same  object  and  the  same  year,  which  were  as  follows,  independent  of  those  for  ordnance,  viz : 

By  the  act  of  May  13, 1846 $10,000,000  00 

Do.        May  19,  1846 89,000  00 

Do.        July  20,1846 11,616,015  00 

Do.        August  8,  1846 5,545,128  00 

Do.         March.2,  1847 7,120,968  00 


$34,371,111  00 
Deduct  increased  balance  of  unexpended  appropriation  in  hands  of  Paymaster  General        825,819  00 

$33,545,292  00 
Ordnance  and  navy,  estimated  as  per  above 2,000,000  00 

Total $35,545,292'  00 

The  true  amount  of  the  expense  actually  incurred  during  that  fiscal  year  cannot  be  fully  ascertain 
ed  until  the  several  accounts  mentioned  in  the  Quartermaster  General's  report  shall  have  been  receiv 
ed  and  settled. 

Although  the  whole  amount  which  shall  be  found  to  have  been  thus  expended  has  been  destroyed 
by  the  war,  yet  the  whole  is  not  the  result  of  the  Mexican  war.  It  appears  by  former  official  state 
ments  that  the  expense  for  the  army  proper  amounted,  during  the  fiscal  year  eiading  June  30,  1845, 
to  $3,155,000,  and  during  the  year  ending  June  30,  1846,  to  $3,947,000.  There  is,  therefore,  an 
annual  sum  of  about  three  millions  and  a  half,  which,  though  making  part  of  the  army  expenditure, 
cannot  justly  be  charged  to  the  war  with  Mexico. 

The  next  subject  of  inquiry  is  the  average  number  of  the  troops  in  actual  service  during  that  year. 
This  cannot  be  ascertained  with  any  degree  of  precision.  The  Adjutant  General  gives  the  number 
of  regulars  recruited  and  of  volunteers  mustered  during  the  year,  and  the  probable  estimate  of  the 
nominal  amount  in  actual  service  of  both  at  the  end  of  the  fiscal  year.  But  he  does  not  state,  and 
had  not  probably  the  means  of  stating,  the  time  and  times  at  which  they  respectively  did  actually 
become  a  part  of  the  troops  in  the  field.  .It  is  certain  that  this  was  done  gradually.  The  number 
of  effective  men  did  not  when  the  war  broke  out  exceed  eight  thousand  ;  and  it  was  hardly  forty 
thousand  at  the  end  of  the  fiscal  year.  It  appears  to  me  to  be  fair  to  estimate  the  average  amount 
at  twenty-five  thousand.  This,  however,  is  only  a  conjecture,  and  it  is  possible  that  the  average 
may  have  been  thirty  thousand. 

.  The  estimate  of  the  Quartermaster  General  is  about  three  millions  less  for  the  fiscal  year  ending 
June  30,  1848,  than  had  been  expended  during  the  preceeding  year.  This  difference  may  be  con 
sidered  as  the  amount  of  extra  expenses  incurred  during  the  first  year  of  the  war  in  organizing  at 
once  such  an  extensive  system  of  operations  and  in  transporting  the  main  body  of  the  army  to  Vera 
Cruz.  This  would  reduce  the  annual  expense  necessary  for  supporting  an  army  of  twenty-five  or 
thirty  thousand  men  abroad  to  thirty-two  millions  of  dollars. 

Fiscal  year  ending  June  30,  1848. 

The  Secretary  of  the  Treasury  had,  in  his  report  of  December  10, 1846,  estimated  the  expenses 
jhis  year  for  the  army  proper  and  volunteers  at  $24,302,544. 

his  report  of  December  8,  1847,  he  estimates  the  receipts  and  expenditures  for  the  same  year 
as  iolf^ws : 

RECEIPTS. 

From  cusWis, first  quarter,  by  actual  returns $11,106,257  41 

From  custofhc  for  second,  third,  and  fourth  quarters,  as  estimated 19,893,742  59 


$31,000,000  00 


Fromsalesof  public  lands 3,500,000  00 

From  miscellaneous  sources 400,000  00 


Total  receipts $34,900,000  00 

From  avails  of  Treasury  notes  and  loans 6,285,294  55 


Add  balance  in  the  Treasury  July  1, 1847... 


$41,185,294  55 
..     1,701,251  25 


Total  means  as  estimated , $42,886,545  80 

EXPENDITURES. 
The  actual  expenditure  for  the  first  quarter,  ending  September  30,  1847,  were  (as 

appears  in  detail  by  accompanying  statement  B.) $16,469,194  69 

The  estimated  expenditures  during  the  other  three  quarters,  are — 

Army  proper,  including  volunteers 19,080,865  58 

Naval  establishment 10,241,072  47 

All  other  expenses 12,824,527  33 


From  which  substracting  the  means,  as  per  above. 


58,615,660  07 
42,886,545  80 


Leaves  a  deficit  of. $15,729,114  27 

If  we  were  to  suppose  that  twelve  millions  out  of  the  $16,469,164,  expended  during  the.  quarter 
ending  30th  September,  had  been  spent  for  the  reguar  army  and  volunteers,  this,  added  to  the 
$19,080,865,  estimated  for  the  same  object  during  the  last  three  quarters,  would  make  the  aggregate 
less  by  several  millions  than  the  amount  already  appropriated,  or  which  must  be  appropriated,  in  order 
to  cover  ascertained  deficiencies. 

But'the  observation  made"  with  respect  to  the  statement  A  applies  equally  to  B,  the  substance  of 
which  should  have  been  embodied  in  the  report  of  the  Secretary  of  the  Treasury,  instead  of  being 
thrown  in  the  mass  of  documents  printed  several  weeks  later.  I  have  equally  failed  in  my  attempt 
to  procure  a  copy  of  it.  As  the  matter  now  stands,  the  report  does  not  exhibit  the  details  of  the 
expenditure  of  the  first  quarter,  which  the  Secretary  did  know  ;  and  it  does  give  the  estimated 
details  of  the  last  three  quarters,  which  he  did  not  and  could  not  know. 

The  estimate  of  the  war  expenses,  for  the  year  ending  June  30, 1848,  derived  from  the  appropria 
tions  already  made,  and  from  the  estimates  of  additional  appropriations  asked  for  by  the  Secretary 
of  the  Treasury,  by  his  letter  of  November  24,  1847,  is  as  follows : 

Appropriated  by  act  of  March  2,  1847,  deducting  ordnance $23,335,275 

Additional  appropriations  to  cover  deficiencies,  deducting  ordnance 9,602,439 

Additional  appropriations  by  act  of  December,  1847 4,000,000 

Ordnance  and  Navy  Department,  estimated  by  me 2,000,000 


The  expenses  are  for  the  following  objects  respectively : 


$38,937,714 


Act  of  March 
2,  1847. 

Deficiencies. 

Total. 

Pay  of  the  armv  

'$3,365,462 
2,815,595 
2,211,626 
150,000 
12,314,400 

832,192 
974,000 
110,000 
12,000 
50,000 
500,000 

|3,937,939 
64,500 
5,600,000 

4,000,000 

$6,181,057 

6,149,565 
214,500 
17,917,400 

2,478,192 
4,000,000 

Do.        volunteers....,  

Subsistence  of  both    .                 .... 

Medical     do.     do  

Quartermaster  General           

Commutation  of  subsistence,  &c  — 
To  officers  

Clothing  

Recruiting                        .  . 

Three  months'  extra  pay  

Contingencies      

Relief  to  discharged  volunteers  

Appropriation  of  December,  1847  

Ordnance  and  Navy  Department  estimated 

023,335,275 

$13,602,439 

$36,937,714 
2,050,000 

Total  ... 

£38,937,714 

The  number  of  men  on  the  rolls  at  «the  commencement  of  this  fiscal  year  is  rstimated  by  the 
Secretary  of  War  at  forty-three  thousand,  or  at  least  thirty-three  percent,  mor-  than  the  highest 
average  number  that  can  possibly  have  been  employed  in  the  preceding  year.  Considering  that 


the  number  of  recruits  wanted  to  fill  the  regular  regiments  already  authorised  by  law  is  estimated 
by  the  Adjutant  General  to  have  amounted,  on  the  30th  of  September,  1847,  to  10,764 ;  that  these 
are  daily  recruiting,  and  that  an  additional  volunteer  force  has  lately  been  called  into  service  from 
the  States  of  Michigan,  Alabama,  and  Mississippi,  it  can  hardly  be  doubted  that  the  average  force 
employed,  during  the  fiscal  year  ending  June  30,  1843,  will  be  fifty  per  cent,  greater  than  in  the 
preceding  fiscal  year. 

The  Paymaster  General  observes  that  "  more  volunteers  have  been  called  into  service  the  present 
iiscal  year  than  were  appropriated  by  Congress ;  and  I  shall  have  to  estimate  for  an  arrearage,  so 
-soon  as  the  official  return?,  showing  the  average  strength  of  the  several  regiments,  are  received, 
enabling  me  to  ascertain  the  amount  that  will  be  required."  Pie  had  on  the  Ifst  of  July,  1847,  a 
balance  on  hand  of  $1,763,000  ;  the  appropriations  already  made  for  pay  of  regulars  and  volun 
teers,  for  the  present  fiscal  year  ending  the  30th  June,  1848,  amount  to  $6,181,000,  and  he  an 
nounces  arrears  besides  those  sums.  Other  deficiencies  may  be  expected,  and  it  is  highly  probable 
that  the  total  expense  for  that  year  will  not  fall  short  of  forty-five  to  fifty  millions  of  dollars,  for  the 
support  of  thfcj  .troops  alone  which  are  now  authorized  by  law. 

Fiscal  year  ending  June  30,   1849. 

It  appears  to  me  impossible  that  the  expenses  for  that  year  should  not  be  equal  those  for  the  year 

•  ending  30th  June,'  1848.     The  Secretary  estimates  them  at  only  $31,856,758  50,  to  which,  adding 
for  Navy  and  ordnance  my  estimate  of  $2,000,000,  they  would  still  amount  to  less  than  $34,000,000. 

The  great  diminution  is  in  the  Quartermaster  General's  estimate,  which  is  reduced  to  $13, 187,000, 
instead  of  $17,914,000  expended  in  the  year  ending  30th  June,  1848.  On  this  subject  the  Quarter 
master  General  writes  to  the  Secretary  of  the  War  Department,  under  date  of  November  15th,  1847; 

"  SIR  :  The  estimates  which  I  submitted  for  your  consideration  on  the  4th  instant,  for  the  service 
of  the  next  fiscal  year,  were  made  out  from  data  derived  from  the  experience  of  the  last  year.  In 
compliance  with  your  suggestions,  I  have  carefully  re-examined  every  item  ;  and  in  all,  depending 
in  any  degree  upon  my  own  action,  or  that  of  the  officers  of  the  Department,  I  have  made  conside 
rable  reductions.  Whether  those  reductions  be  judicious  time  must  determine.  I  would  not  have 
ventured  to  make  them  but  for  the  fact  that  two  sessions  of  Congress  will  have  terminated  before 
the  expiration  of  the  fiscal  year  for  which  the  estimates  now  submitted  have  been  made.  The 
sums  asked  for  arrearages  for  the  present  fiscal  year  are  not  more,  I  am  persuaded,  than  will  be 
required.  I  am,  however,  making  every  effort  to  reduce  expenditures  of  every  description  to  the 
lowest  point  possible." 

It  is  therefore  clear  that  the  estimate  was  under-rated,  contrary  to  the  Quartermaster  General's 
opinion  ;  that  he  would  not  have  made  the  reduction,  had  he  not  relied  on  Congress  making  up 
the  deficiency  before  the  whole  of  the  money  was  wanted  ;  and  that  the  attempt  is  now  delibe 
rately  made  to  under-rate  the  expenses  which  must  necessarily  be  incurred. 

III.  It  hns  already  been  observed  that  the  causes  which  had  heretofore  prevented  the  evils  of  the 
war  from  being  felt,  had,  at  least  for  a  while,  ceased  to  operate.  A  total  derangement  has  taken 
place  in  England,  which  appears  to  have  affected  almost  every  branch  of  business  connected  with 
the  commercial  and  manufacturing  concerns  of  the  country.  The  causes  generally  assigned  are, 
the  extraordinary  imports  of  provisions,  and  the  magnitude  of  the  investments  in  railroads,  which 
have  converted  circulating  into  a  fixed  capital  not  immediately  productive.  There  may  be  other 
more  remote  and  recondite  causes.  Whatever  these  may  be,  the  results  are  well  known.  Most 
numerous  and  extensive  failures  have  destroyed  confidence,  and  caused  a  general  pressure,  followed 
,by  a  fall  of  prices  affecting  almost  every  species  of  commodity,  and  by  a  great  demand  for  specie. 

The  effects  of  that  commercial  catastrophe  were  immediately  felt  in  the  United  States.  There 
•was  and  still  is  a  reciprocal  want  of  confidence.  Hence,  the  usual  mode  of  consigning  produce  to 
England,  accompanied  by  bills  drawn  on  the  consignees  for  a  large  portion  of  its  value,  has  been 
considejably  impeded.  The  low  prices  of  cotton  abroad  induced  the  planters  to  keep  it  back  ;  and 
every  arrival  from  England  brought  large  parcels  of  American  stocks  ordered  to  be  sold  for  what  they 
-would  fetch.  The  reaction  took  place  in  the  early  part  of  November,  when  it  was  manifested  by 
its  infallible  index,  a  rise  in  the  rate  of  exchange  and  a  consequent  exportation  of  specie. 

The  amount  of  specie  in  the  vaults  of  the  banks  of  the  city  of  New  York  was  lessened  near  two 
•millions  and  a  half  of  dollars  during  the  month  of  November.  Yet  it  does  not  appear  to  me  that 
there  is  any  great  danger  to  be  apprehended  from  a  long  continued  exportation.  There  was,  in. 
the  course  of  the  present  crisis  in  Great  Britain,  in  the  first  place,  a  large  exportation  of  specie  prin 
cipally  to  the  United  States,  in  payment  for  the  articles  of  food  she  was  obliged  to  purchase,  and 
subsequently  a  great  demand  for  specie.  This  has  been  amply  supplied,  and,  for  ths  present  at 
least,  England  wants  no  more.  If  any  continues  to  be  exported  there,  this  is  principally  due  te  the 
want  of  confidence,  and  those  other  causes  which  created  a  scarcity  of  bills  of  indubitable  credit 
on  Europe,  and  raised  the  price  of  these  two  per  cent,  above  the  true  par. 

There  is  yet  scattered  in  the  interior  a  large  portion  of  the  specie  imported  during  the  preceding 
year  ;  and  this  will,  as  is  always  the  case,  naturally  flow  to  the  place  or  places  where  it  is  most 
needed.  In  point  of  fact,  this  has  already  taken  place  ;  and,  notwithstanding  the  continued  expor 
tation/the  amount  of  specie  in  the  vaults  of  the  banks  has,  during  the  last  three  weeks,  been  in 
creased  several  hundred  thousand  dollars.  As  soon  as  the  internal  navigation  shall  be  open,  large 

•  quantities  of  maize,  pork,  and  other  articles  of  food,  will  be  exported  to  Europe  ;  and  cotton  cannot 


8 


be  held  back  much  longer.  Thus  far  every  thing  is  yet  sound  ;  but  the  high  rate  (at  least  one  per 
cent,  a  month)  at  which  money  is  borrowed  on  paper  of  undoubted  credit,  would  alone  be  suffi 
cient  to  show  that  great  caution  is  required  on  the  part  not  only  of  the  banks,  but  of  all  those  who 
are  engaged  in  active  business.  Notwithstanding  the  great  increase  of  national  wealth,  there  is 
still  a  perpetual  demand  for  capital.  The  circulating  capital  of  the  country  is  clearly  the  fund  out 
of  which  the  public  revenue  and  loans  must  be  raised  ;  and  the  effect  produced  by  a  demand  of 
thirty  millions  within  the  next  six  months  requires  serious  consideration. 

Five-eighths  of  the  revenue  derived  from  customs  are  collected  in  New  York,  and  nine-tenths  in 
five  or  six  Atlantic  seaports.  These  duties  are  payable  the  moment  the  merchandise  is  landed  or 
withdrawn  from  the  public  warehouses.  This  substitution  of  immediate  payment,  for  the  former 
system  of  bonds  and  credit,  was  a  sacrifice  imposed  on  commerce,  the  importance  of  which  has  not 
been  sufficiently  appreciated.  It  has,  among  other  effects,  thrown  a  considerable  portion  of  the  import 
ing  business  in  the  hands  of  foreign,  to  the  prejudice  of  American  houses.  Still  commerce,  left  to  the 
operation  of  the  natural  laws  of  trade,  knows  how  to  adapt  itself  to  existing  circumstances  ;  and 
notwithstanding  this  change,  things  went  on  smoothly  enough  so  long  as  peace  continued. 

The  necessary  effect  of  a  war  carried  on  in  a  foreign  country,  of  our  war  with  Mexico,  is  that 
the  money  thus  collected  in  a  feW  seaports,  and  in  fact  advanced  by  commerce,  instead  of  being  ex 
pended  with  some  degree  of  uniformity  in  the  country,  must  be  immediately  transferred  by  the 
Treasury  Department  of  the  United  States  to  the  places  where  it  is  wanted  and  expended.  The 
great  mass  goes  to  Mexico  and  New  Orleans,  whence  it  does  not  return  to  New  York,  or  to  any 
other  Atlantic  seaport,  since  it  is  absorbed  and  destroyed  by  war  expenses. 

In  these  transfers  from  the  places  where  the  revenue  is  collected,  the  Secretary  has  done  nothing 
more  than  that  which  was  absolutely  necessary  ;  and  he  has  done  it  cautiously,  skilfully,  and  with 
as  much  regard  for  local  and  commercial  concerns  as  was  practicable.  The  city  of  New  York  has 
had  also  its  full  share  of  the  moneys  expended  for  local  purposes,  or  for  the  purchase  of  supplies. 

This  city  is  not  only  the  port  where  the  greater  part  of  the  revenue  is  collected,  but  it  has  also 
become  the  centre  of  all  the  great  moneyed  operations  of  the  country.  It  is  accordingly  the  place 
also  where  a  considerable  share  of  the  most  disposable  portion  of  the  circulating  capital  of  the  coun 
try  is  concentrated.  This  most  disposable  portion  is  that  which  is  deposited  in  the  banks  of  the 
several  States.  And,  exclusively  of  the  deposites  due  to  individuals,  the  banks  out  of  this  city  have 
always  a  large  amount  deposited  in  the  city  banks.  Including  both  items,  it  would  seem  .from  the 
general  returns  from  all  the  banks  that  the  amount  deposited  in  those  of  the  city  of  New  York  does 
not  exceed  one-fourth  part  of  the  total  amount  deposited  in  all  the  banks  of  the  United  States.  But 
experience  has  shown  that,  with  the  exception  of  South  Carolina  and  of  Louisiana,  the  deposites  in 
the  banks  of  the  Southern  and  Western  States  are  available  only  for  local  purposes,  and  contribute 
but  very  little  to  the  loans  which  maybe  wanted  by  the  United  States.  The  same  observation  is 
generally  applicable  to  the  deposites  in  the  country  banks  of  New  England,  New  York,  and  Penn 
sylvania.  Those  Atlantic  seaports,  in  which  nine-tenths  of  the  revenue  are  collected,  are  also  the 
places  which  contribute  in  the  same  proportion  to  the  national  loans.  Although  varying  from  year 
to  year,  the  amount  of  deposites  in  all  the  banks  of  the  United  States  which  are  truly  available  for 
general  purposes  may  estimated  at  twice  that  which  is  deposited  in  the  city  banks  of  New  York. 
According  to  the  last  official  report,  the  following  was  the  situation  of  both  the  city  and  country 
"banks  of  New  York  on  the  1st  of  November,  1847  : 


• 

City. 

Country. 

Total. 

Liabilities. 
Capital      

$24  002  000 

$19278  000 

$43,280,000 

Profits  

2  878  000 

3,165000 

6,043,000 

Circulation 

6  964  000 

19  273  000 

26,237,000 

Deposites.      ..              

25  766  000 

9  331  000 

35/)97,000 

.Due  to  banks 

11  512  000 

5  522  000 

17,034000 

Other  debts        .                      ..... 

674  000 

3  884  000 

4,558,000 

* 
• 

71,796,000 

60,453,000 

132,249,000 

Resources. 
Tjoans  and  discounts 

$44  003  000 

$36  887  000 

$80,890,000^ 

Stocks  and  promissory  notes 

5  2119  000 

8  262  000 

13,471,060 

Notes  of  solvent  banks  

1,018000 

1,402,000 

2,420,00tt 

Mortgages 

155  000 

2  558  000 

2,713,00a 

Due  from  banks 

3  207  000; 

7  519,000 

10,726,000 

Loss  and  expense             

364  000 

388,000 

752,000 

Heal  estate  

1,946,000 

1,519,000 

3,465,000 

Specie  . 

8  002  000 

1,106,000 

9,108,000 

Cash  items  

7,892,000 

812,000 

8,704,000 

71,796,000 

60,453,000 

132,249,000 

9 

The  deposites  in  the  city  banks  consist  of  two  items,  those  due  to  individuals  and  those  due  to 
banks  out  of  the  city  ;  that  is  to  say,  the  difference  between  the  sums  due  to  and  from  those  banks., 
which  on  the  1st  of  November  last  amounted  to  $8,300,000,  and  added  to  the  deposites  due  to  indi 
viduals  made  an  aggregate  of  more  than  thirty-four  millions.  But  it  must  be  observed  that  these 
items,  "  due  to  bank?,"  and  "due  from  banks,"  indicate  only  the  relative  position  of  the  city  banks 
compared  with  those  out  of  the  city,  whether  within  or  without  the  State.  It  shows  that  banks  out 
of  the  city  have  found  it  convenient  to  have  a  large  credit  in  the  banks  of  this  city.  But  in  consider 
ing  the  United  States  at  large,  since  the  amount  clue  to  all  the  banks  is  identic  with  the  amount  due 
from  all  the  banks,  both  items  will  disappear  altogether,  and  do  not  constitute  a  real  resource. 

No  official  statement  of  the  situation  of  the  banks  subsequent  to  the  month  of  November 'has  as 
yet  been  published.  But,  from  accounts  obtained  from  several  of  the  most  respectable  of  the  city 
banks,  it  appears  that  during  the  month  of  November  and  the  first  weeks  of  December,  the  amount 
of  their  deposites  (including  those  due  both  to  individuals  and  to  banks)  has  lessened  at  least  twenty- 
five  percent.  This  is,  in  reference  to  the  fiscal  and  commercial  concerns  of  the  nation,  the  most 
important  and  pregnant  fact  which  has  taken  place  since  the  commencement  of  the  war,  inasmuch 
as  it  shows  in  a  tangible  manner  to  what  extent  the  war  expenses  and  the  consequent  destruction  of 
capital  have  affected  the  circulating  capital  of  the  country. 

That  the  deposites  in  banks  are  the  most  dispo^ble  circulating  capital  of  th*  United  States  is  indu 
bitable  for  the  simple  reason  that  they  bear  no  interest.  They  constitute,  therefore,  evidently  the  fund 
most  likely  to  supply  the  means  of  subscribing  to  the  loans  of  the  United  States.  Is  there  any  other 
similar  fund,  any  other  amount  of  dormant  unemployed  circulating  capital,  which  may,  to  any  consid 
erable  extent,  contribute  to  the  public  loans  ?  There  may  still  be  some  superrlous  specie  in  the  interior, 
some  small  amounts  hoarded  up  and  waiting  for  an  eligible  investment ;  but  the  total  amount  that  can 
be  derived  from  that  source  will  be  but  a  most  insignificant  item  compared  with  the  amount  of  the 
loan  which  is  required. 

There  may  be  many  persons  desirous  of  converting  State  or  other  local  stocks,  houses  or  any  other 
marketable  property  into  stocks  of  the  United  States.  The  only  consequence  is,  that,  in  this  case,  the 
purchasers  of  such  objects  must,  instead  of  the  money-lenders,  find  the  means  of  raising  the  money  ; 
and  this  must  likewise  be  supplied  by  the  same  fund,  by  the  circulating  capital  of  the  country. 

Whatever  view  of  the  subject  may  be  taken  the  conclusion  is  the  same.  The  circulating  capital 
must  supply  the  loans  and  all  the  other  means  of  carrying  on  the  war.  The  portion  of  that  capital 
which  is  the  least  actively  employed,  is  naturally  that  which,  in  the  first  instance,  supplies  the  means  ; 
and  the  ability  of  the  banks  to  discount  is  lessened  to  an  extent  equal  to  the  reduction  in  the  amount 
of  their  deposites. 

It  may,  indeed,  be  assumed  that  the  ordinary  returns,  in  payment  of  the  gales  of  imported  goods, 
will  enable  commerce  to  pay,  not  however  without  some  pressure,  the  fifteen  millions  of  custom-house 
duties  expected  to  be  collected  during  the  first  six  months  of  the  calendar  year  1848.  But  it  is  im 
possible  that  the  effect  of  a  loan  of  eighteen  millions  and  a  half,  a  considerable  portion  of  which  must 
be  supplied  by  the  bank  deposites,  should  not  be  most  seriously  felt.  The  bank  deposites  must  neces 
sarily  be  more  or  less  diminished  ;  the  banks  must,  curtail  their  discounts  to  the  same  extent,  and  the 
merchants  be  deprived  to  a  considerable  extent  of  the  usual  accommodations  on  which  they  rely  in 
order  to  carry  on  their  business.  The  city  banks  understand  their  position  ;  they  will  make  no  unne 
cessary  curtailment,  but  they  will  resist  the  demands  and  the  clamors  for  what  is  very  improperly  cal 
led  a  liberal  course,  that  is  to  say,  discounting  beyond  their  means.  '1  he  recollection  of  the  incidents 
of  the  last  suspension  and  resumption  of  specie  payments,  a  sense  of  their  duty  to  the  public,  and  the 
danger  of  annihilation,  will  all  combine  in  making  them  pursue  with  firmness  the  only  safe  course. 
A  suspension  of  specie  payments  would  forfeit  their  charters,  and  there  ij;  now  no  hope  of  legislative 
relief;  for  it  is  provided  by  the  new  constitution  of  the  State  that  "  the  Legislature  shall  have  no 
power  to  pass  any  law  sanctioning  in  any  manner,  directly  or  indirectly,  the  suspension  of  specie  pay 
ments  by  any  person,  association,  or  corporation,  issuing  bank  notes  of  any  description." 

For  ail  this  there  is  no  remedy.  '1  he  war  expenses  for  the  fiscal  year  ending  June  30,  1848,  are 
in  a  great  degree  already  incurred,  at  all  events  unavoidable.  According  to  all  appearances  the  evil 
will  be  prolonged  at  least  one  year  longer.  There  is  hardly  any  hope  that  peace  shall  be  concluded 
by  the  present  Administration.  Unless  relief  should  come  from  some  unexpected  contingency,  it  is 
impossible  that  the  pressure  should  not  become  more  and  more  intense,  and  be  felt  through  the  whole 
country  as  long  as  the  war  continues. 

I  have  spoken  more  particularly  of  the  city  of  New  York,  because  I  know  it  best,  and  because  it 
is  by  far  the  most  important  point,  in  reference  not  only  to  commerce  and  revenue,  but  also  to  cur 
rency.  It  has  been  proved  by  experience  that  the  banks  of  this  city  may  resume  and  sustain  specie 
payments  alone,  and,  on  the  other  hand,  that  their  suspending  such  payments  is  attended  with  a  simi 
lar  failure  by  almost  all  the  other  banks  in  the  United  States.  And  the  same  causes  which  will  pro 
duce  a  pressure  in  New  York  will  operate  directly  and  in  the  same  manner  on  Boston,  Philadelphia, 
Baltimore,  and  all  the  other  important  seaports. 

It  has  already  been  observed  that  the  deposites  in  the  banks  of  the  Western  States  were  wanted 
and  available  only  for  local  purposes.  But  that  was  not  saying  enough.  The  Western  States  have 
not  as  yet  accumulated  a  sufficient  circulating  capital  for  their  local  demands.  Possessed  of  the 
richest  soil  in  the  Union,  that  is  their  only  want.  In  all  their  undertakings,  whether  successful  or 
irrational,  they  have  always  relied  on  a  foreign  capital.  It  is  impossible  that  every  portion  of  the 


10 

Union  should  not  be,  to  a  greater  or  less  extent,  affected  by  any  considerable  diminution  and  des 
truction  of  the  national  circulating  capital. 

IV.  We  must  submit  to  that  which  is  unavoidable.  In  order  to  defray  expenses  already  incurred 
a  loan  is  necessary  ;  for,  even  if  taxation  were  deemed  preferable,  it  could  not  be  made  productive 
in  time,  since  the  question  now  is  only  with  respect  to  expenses  incurred  or  to  be  incurred  prior  to 
the  30th  of  June  next.  Whether  the  war  be  approved  cr  condemned,  public  faith  must  be  main 
tained,  and  the  necessary  loan  be  negotiated  on  the  most  favorable  terms  that  can  be  obtained,  and 
in  the  most  eligible  form  that  can  be  devised. 

It  is  impossible  for  any  Government  to  pretend  to  prescribe  the  rate  of  interest  and  other  condi 
tions  on  which  money  shall  be  lent  to  them.  This  will  depend  on  the  confidence  placed  in  the  good 
faith  and  resources  of  Government,  on  the  general  rate  of  interest  in  the  country,  on  the  probability 
of  a  longer  or  shorter  war,  and  on  several  other  variable  considerations.  There  is,  however,  one 
general  and  apparently  invariable  law.  As  the  war  continues,  and  as  new  annual  loans  are  required, 
Governments  are  compelled  to  pay  dearer  every  successive  year  for  the  money  borrowed  ;  or,  which 
is  the  same  thing,  the  marketable  price  of  their  stocks  is  lessened  every  successive  year.  This  has 
taken  place  every  where,  and  is  most  striking  in  the  instance  of  Great  Britain,  because  ever  since 
the  beginning  of  the^Sth  century  perfect  confidence  has  always  been  placed  in  the  good  faith  of 
the  Government,  and  in  its  ability  to  pay  at  least  the*interest.  Yet  in  every  successive  war,  and 
particularly  in  those  of  more  recent  dale,  the  process  has  been  regularly  the  same,  selling  a  three 
per  cent,  stock  nearly  at  par  at  the  beginning  of  the  war,  and  finally  the  value  gradually  decreasing 
every  year  at  the  rate  of  about  fifty  per  cent. 

In  the  present  case,  the  terms  of  the  loan  will  in  a  great  degree  depend  on  the  opinion  which  the 
money  lenders  may  entertain  respecting  the  prospect  of  a  speedy  peace,  or  rather  respecting  the  pro 
bability  of  another,  and  a  series  of  other  loans.  Most  of  those  who  subscribe  to  a  loan  expect  to 
sell  it  with  a  profit,  and  are  therefore  apprehensive  of  the  effect  produced  on  the  market  by  new 
issues  of  stock,  which  must  necessarily  depreciate  its  value.  Was  it  not  for  that  apprehension  it  is 
probable  that  a  loan  in  six  per  cent,  stock  might  be  obtained  at  a  price  very  little  below  par. 

Whatever  the  rate  of  interest  or  the  price  of  stock  issued  may  be,  I  am  clearly  of  opinion  that  a 
simple  and  direct  loan,  for  which  nothing  but  stock  shall  be  issued,  is  the  most  eligible  mode  of  bor 
rowing.  Whether  this  will  be  effected  by  giving  a  six  per  cent,  stock  at  a  less  price  than  its  nomi 
nal  value,  or  by  giving  a  stock  bearing  a  higher  interest  than  six  percent,  at  par,  will  depend  in  some 
degree  on  the  opinions  of  the  money  lenders.  All  other  things  being  equal,  although  I  was,  from  par 
ticular  circumstances,  compelled  during  the  last  war  to  pursue  a  different  course,  I  think  the  last 
mode  to  be  preferable. 

In  arranging  the  terms  it  must  always  be  recollected  that  there  is  an  important  difference  between 
Great  Britain  and  the  United  States.  Entertaining  no  expectation  of  ever  reimbursing  the  capital, 
the  sole  object  of  the  British  Chancellor  of  the  Exchequer  is  to  obtain  the  money  at  the  lowest  pos 
sible  rate  of  interest.  We  must  never  lose  sight,  in  the  United  States,  of  the  fundamental  principle, 
heretofore  so  constantly  adhered  to,  that  Government  will  pay  the  capital  of  the  debt  as  soon  as 
practicable.  On  that  principle  the  loans,  reimbursable  within  the  shortest  possible  time,  are  always 
preferable.  If  it  were  practicable,  and  supposing,  for  instance,  that  both  could  be  sold  for  the  same 
price,  a  seven  per  cent,  stock,  redeemable  within  ten  years,  would  appear  to  me  more  eligible  than 
one  bearing  six  per  cent,  interest  and  redeemable  in  twenty  years. 

The  preceding  observations  apply  only  to  details  ;  but  there  is  an  important  point  to  which  I  wish 
to  call  the  public  attention. 

Treasury  notes  were  first  introduced  by  me  ;  they  are  but  a  mere  transcript  of  the  British  Exche 
quer  bills,  and  were  intended  to  perform  the  same  ofiice.  At  the  commencement  of  a  war  they 
afford  a  convenient  mode  of  anticipating  a  portion  of  the  annual  revenue,  equal  to  the  amount  of 
notes  which  may  be  kept  in  circulation  at  par  or  above  par.  They  afford  the  means  of  convenient 
investment  for  a  short  period  ;  and  the  extent  to  which  they  may  circulate  at  par  depends  on  the  de 
mand  for  such  investments.  They  are  made  payable  at  the  end  of  a  short  period,  generally  one  year 
from  their  date  ;  and  they  bear  an  interest  generally  lower  than  that  which  prevails  at  the  time.  So 
long  as  they  bear  those  characters  they  never  can  become  part  of  the  currency.  No  species  of  paper, 
by  whomsoever  issued,  can  become  a  currency  as  long  as  specie  payments  are  maintained,  unless  it 
can  be  exchanged  at  once  for  specie  at  its  nominal  value.  This  is  the  character  of  bank  notes  ;  and 
it  is  wanted.in  the  Treasury  notes,  the  value  of  which  necessarily  fluctuates  according  to  demand  and 
to  the  rate  at  which  money  may  be  borrowed.  If  above  par,  no  debtor  will  give  them  in  payment  of 
his  debt ;  if  beloW  par,  no  creditor  will  accept  them.  If,  in  order  to  increase  the  demand,  they  are 
made  receivable  in  payment  of  custom-house  duties,  or  any  other  debt  due  to  Government,  they  are 
still  subject  to  the  same  general  law.  If  above  par  they  never  will  be  used  for  the  purpose  of  effecting 
such  payment.  If  below  par,  Government  will  be  compelled  to  receive  them  in  payment;  whilst, 
on  the' other  hand,  it  is  obliged  to  make  all  its  payments  in  specie,  or  in  drafts  equal  in  value  to  specie. 
This  is  precisely  the  state  of  things  at  this  moment.  In  order  to  increase  their  circulation  the  Trea 
sury  notes  have  also  been  made  convertible  at  any  time  into  a  six  per  cent,  stock  ;  which  would  have 
answered  a  good  purpose  if  the  price  of  the  six  per  cent,  stock  could  have  been  maintained  at  par. 

There  is,  however,  a  state  of  things  during  which  the  amount  of  Treasury  notes  may  be  indefi 
nitely  increased,  and  be  occasionally  used  as  a  currency.  This  takes  place  when  there  is  a  general 
suspension  of  specie  payments.  When  this  catastrophe  takes  place  in  England  there  is  at  least  uni- 


11 

formity  of  depreciation.  The  notes  of  the  Bank  of  England  are  substituted  for  specie  ;  and  the 
price  of  all  commodities  of  public  stocks  and  of  exchequer  bills  is  regulated  by  the  market  value  of 
those  notes  in  specie.  And  this  generally,  though  not  with  perfect  uniformity,  will  depend  on  the 
contraction  or  expansion  of  the  bank  issues.  But  there  is  not  in  tne  United  States  any  such  general 
paper  standard.  During  a  suspension  of  specie  payments  the  amount  of  issues  in  bank  notes  is  regu 
lated  in  each  State  by  its  laws  or  by  public  opinion.  At  such  time  there  are  twenty  or  thirty  species 
of  currency,  according  to  locality  ;  and  each  of  these  varies  in  each  place,  according  to  public  opin 
ion,  which  in  some  instances  has  been  sufficient  to  restrain  the  depreciation  within  very  narrow 
limits.  It  is  during  such  a  state  of  things  that  the  payment  of  Treasury  notes  may  be  postponed, 
and  the  issues  be  increased  indefinitely.  In  that  case  they  become  pure  paper  money,  and  may 
compete,  perhaps  advantageously,  with  the  other  paper  currencies  in  circulation.  Such  was  the 
-case  in  the  United  States  from  the  time  of  the  general  suspension  of  specie  payments  in  September, 
1811,  till  these  were  resumed  in  1816-17. 

I  believe  that  it  was  in  1837,  and  after  another  general  suspension  of  specie  payments  had  taken 
place,  that  Treasury  notes  were  again  resorted  to  ;  and  they  made  also  a  part  of  the  loans  of  1841 
and  1842.  The  amount  must  have  been,  however,  very  inconsiderable,  and  I  never  saw  one  of  them. 
But  they  have  been  the  foundation  of  the  two  war  loans  of  July,  1846,  and  January,  1847,  in  which 
the  issuing  of  stock  is  but  a  supplementary  incident. 

The  amount  authorized  by  the  act  of  July  22,  1846,  is  ten  millions,  and  that  by  the  act  of  Janua 
ry  28,  1847,  tweiity-th.ee  millions  ;  together  thirty-three  millions,  including  both  the  notes  and  stock, 
which  may  be  issued  by  virtue  of  the  said  acts. 

The  six  per  cent,  stock  of  the  United  States  is  now  below  par,  and  the  Secretary  of  the  Treasury 
sees  clearly  that  a  direct  loan,  for  which  such  stock  would  be  issued,  could  not  in  all  probability  be 
effected  at  par.  He  thinks  it  may  be  done  by  substituting  Treasury  notes  for  stock.  But  I  do  not 
see  in  what  manner  he  can  attain  his  object.  It  is  true  that  Treasury  notes  are  sold  now  at  a  higher 
price  than  six  per  cent,  stock.  To  what  cause  is  this  owing?  Not  certainly  on  account  of  their 
convertibility  into  stock  ;  nor  because  there  is  a  greater  demand  for  shortfnvestrnents,  which  is  im 
possible,  whilst  the  best  secured  paper,  bearing  an  interest  of  twelve  per  cent,  a  year,  may  be  pur 
chased  at  par.  The  only  cause  ot  the  market  price  of  the  Treasury  notes  being  higher  than  that  of 
the  six  per  cent,  stock  is  because  they  are  by  law  received  at  par  in  payment  of  custom-house  duties, 
and  of  any  other  debt  due  to  Government.  The  necessary  consequence  is,  that,  as  long  as  they  are 
ever  so  little  below  par,  they  must  continue  to  form  the  greater  part  of  the  receipts  of  the  Treasury. 
The  Secretary  has  a  right  to  re-issue  them  ;  he  can  compel  no  one  to  receive  them  ;  but,  if  he  has 
nothing  else  to  give,  will  not  the  disbursing  officers,  the  Paymaster  General,  the  Quartermaster  Gene 
ral,  &.C.,  be  obliged  to  take  them,  and  would  not  a  depreciated  paper  currency  be  thus  forced  on  the 
country  ?  If,  on  the  contrary,  the  Secretary  thinks  himself  bound,  as  he  is  in  fact  by  the  law,  to  pay 
all  the  expenses  of  Government  in  specie,  and  he  receives  but  a  very  small  portion  of  the  revenue  in 
coin,  he  must  purchase  the  specie  ;  and,  as  he  has  nothing  to  pay  it  with  but  his  Treasury  notes,  he 
must  sell  these  at  what  price  they  will  fetch.  Such  is  the  state  of  things  at  present ;  and  he  asks  to 
be  allowed  to  make,  in  addition  to  the  notes  which  he  has  a  right  to  re-issue,  a  new  series  of  notes  to 
an  amount  equal  to  the  loan  he  may  want.  It  is  self-evident  that,  if  he  thus  increases  the  amount 
of  the  notes,  be  it  fifty  or  one  hundred  per  cent.,  there  will  be  a  much  greater  amount  than  is  wanted 
for  the  object  to  which  they  are  .now  applied,  that  they  will  necessarily  depreciate,  and  that  the  Secre 
tary  would  be  obliged  to  sell  his  notes  at  a  still  lower  rate,  in  order  to  pay  for  the  specie  wanted. 
This  he  would  have  no  right  to  do,  if  forbidden  to  borrow  at  a  higher  rate  than  six  per  cent.  ;  and 
this  is  in  truth  that  which  cannot  be  avoided.  The  Government  of  the  United  States  must  submit  to 
the  general  law,  according  to  which  it  must,  for  the  money  which  it  is  obliged  to  borrow,  pay  dearer 
and  dearer  every  year,  as  the  war  continues.  It  is  an  unavoidable  consequence,  which  no  legerde 
main  can  prevent  or  conceal. 

Moreover,  there  is  incompatibility  between  the  receiving  Treasury  notes,  or  any  other  species  of 
paper  not  always  and  immediately  convertible  into  specie,  and  the  obligation  imposed  by  the  Subtrea- 
sury  act  to  discharge  all  the  public  expenses  in  specie.  It  is  clear  that,  in  order  to  comply  with  that 
provision,  it  is  necessary  that  the  receipts  should  likewise  be  collected  in  specie. 

It  is  true  that  the  Subtreasury  act  is  an  experiment  which  no  one  State  has  ever  attempted  to  try 
for  itself.  But  I  wish  that  it  may  have  fair  play  ;  for  I  am  clearly  of  opinion  that  it  is  equally  neces 
sary  for  Government,  for  the  public  at  large,  and  for  the  banks  themselves,  that  they  should  never  be 
permitted  to  use  the  public  moneys  for  the  purpose  of  increasing  their  discounts. 

Since  both  the  Subtreasury  act  and  the  obligation  to  receive  Treasury  notes  in  payment  of  debts 
due  to  the  United  States  cannot  subsist  together,  either  the  one  or  the  other  should  be  repealed.  This 
cannot  be  done  with  respect  to  the  notes  already  issued  and  outstanding,  since  it  is  a  privilege  already 
granted,  a  condition  which  the  United  States  are  bound  to  fulfil.  But,  although  the  Secretary  of  the 
Treasury  has  a  right  to  re-issue  an  amount  of  notes  equal  to  that  which  has  been  paid  in  {or  duties  or 
other  debts,  he  is  under  no  obligation  to  do  it.  The  fact  is  that,  in  order  to  extricate  the  Treasury 
from  the  difficulties  resulting  from  the  incompatibility  alluded  to,  it  is  necessary,  instead  of  ex 
tending,  to  contract  the  amount  of  notes  in  circulation. 

On  the  other  hand,  if  the  Subtreasury  act  was  repealed,  modified,  or  suspended,  nothing  would  be 
gained  by  it.  Government  is  bound  by  the  constitutional  provision  which  enacts  that  nothing 
shall  be  a  legal  tender  but  gold  or  silver.  It  cannot  be  permitted  to  substitute,  in  payment  of 


12 

« 

its  own  debts  or  for  defraying  current  expenses,  any  spcciea  of  paper,  the  value  of  which  is  not 
equal  to  specie;  or,  in  other  words,  which  cannot  be  instantaneously  converte'd  at  par  into  specie. 
If,  therefore,  the  Subtreasury  act  was  repealed,  modified,  or  suspended,  the  necessary  consequence 
would  be  that  Government  wbuld  be  compelled  to  receive  in  payment  and  pay  in  the  notes  of 
solvent  banks. 

Treasury  nates  never  become  a  currency,  unless  they  be  vested  with  that  attribute.  This  could 
not  be  effected  otherwise  than  by  converting  the  Treasury  into  a  bank  issuing  notes,  bearing  no  in 
terest,  but  bound  to  pay  them  on  demand  in  gold  or  silver.  It  is  hoped  that  such  a  plan  will  not 
find  a  single  advocate. 

The  attempt  to  borrow  at  a  lower  rate,  by  substituting  Treasury  notes  for  stock,  is  in  every  res 
pect  impracticable  ;  any  effort  to  conceal  the  truth  from  the  people  will  prove  equally  futile.  The 
resort  to  any  species  of  paper  money,  that  is  to  say,  the  attempt  to  convert  into  currency  a  simple 
promise  to  pay  at  a  future  date,  is  dangerous,  liable  to  be  grossly  abused,  and  calculated  to  destroy 
confidence  ;  for,  whenever  issued  to  an  amount  much  greater  than  the  demand  for  it,  a  doubt  may 
arise  whether  such  promises  to  pay  shall  be  actually  discharged  when  they  come  to  maturity.  That 
which  has  happened,  both  in  other  countries  and  at  home,  may  happen  again  ;  and  immoderate  issues 
have  a  tendency  to  engender  a  flood  of  irredeemable  paper  money. 

It  is  undoubtedly  desirable  that  the  amount  of  the  loan  should  be  reduced  as  far  as  practicable, 
and,  with  that  object  in  view,  the.  Secretary  of  the  Treasury  has  recommended  a  duty  on  tea  and 
coffee.  The  propriety  of  a  direct  tax  has  also  been  suggested  for  the  same  purpose. 

As  an  abstract  proposition  it  is  certain  that  a  direct  tax  on  property  is  more  just  than  taxes  on 
consumption.  These,  if  levied  on  articles  of  first  necessity,  such  as  provisions,  or  on  those  articles 
which,  like  sugar,  tea,  and  coffee,  have  become  almost  articles  of  first  necessity,  impose  almost  the 
same  amount  of  duty  on  every  individual,  whatever  that  of  his  property  may  be. 

But,  according  to  the  Constitution,  a  direct  tax  imposed  by  the  United  States  is  apportioned  among 
the  several  States,  not  in  proportion  to  their  respective  wealth,  but  according  to  what  may  be  called 
their  federal  population.  ^  The  States  of  Indiana  and  Massachusetts,  both  free  labor  States,  have  an 
equal  number  of  representatives  in  Congress  ;  and  their  quota  of  a  direct  tax  imposed  by  the  United 
States  would  be  nearly  the  same  under  the  census  of  1840.  Under  that  of  1850  the  quota  of  Indi 
ana  will  probably  be  fifty  per  cent,  greater  than  that  of  Massachusetts.-  Under  existing  circumstances 
a  direct  tax  of  only  two  hundred  thousand  dollars  would  be  hardly  felt  in  Massachusetts  and  be  op 
pressive  in  Indiana.  As  the  population  of  this  State  is  about  one-twenty-fifth  part  of  that  of  the 
United  States,  five  millions  of  dollars  would  be  the  total  amount  of  the  direct  tax.  Generally,  the 
amount  of  a  direct  tax  levied  by  the- United  States  must  be  regulated  by  the  ability  to  pay  of  those 
States  which  have  the  least  wealth  in  proportion  to  their  population  ;  and  it  will  always  bear  most 
unequally  and  oppressively  on  the  States  more  recently  settled. 

.V.  Yet  in  a  defensive  war  the  people  would  cheerfully  bear  every  species,  of  taxation,  and  Gov 
ernment  might  call  forth  all  the  resources  of  the  country.  It  is  quite  otherwise  in  a  war  of  invasion 
and  conquest.  The  Administration  says  that  their  object  is  to  conquer  peace  ;  that  is  to  say,  a 
peace  which  will  give,  according  to  the  common  vague  form,  "indemnity  for  the  past  and  security 
for  the  future."  It  is  not  intended  here  to  inquire  what  right  the  United  States  have  to  ask  any  in 
demnity  from  Mexico.  Justice  is  out  of  the  question ;  we  have  to  deal  with  expediency.  But  to 
say  that  we  must  have  security  or  guaranty  for  the  future  is  really  too  ridiculous.  No  one  can  sup 
pose  that  Mexico  will  ever  invade  the  United  States.  But  the  Mexicans  may  think  that  they  want 
some  security  against  a  Government  which  dismembers  and  threatens  subjugation. 

Whatever  species  of  peace  may  be  contemplated,  it  is  necessary,  in  the  first  place,  to  find  a 
Government  with  whom  to  treat ;  and  that  in  a  country  entirely  conquered  or  occupied  is  impossible. 
In  order  to  make  a  real  treaty  of  peace,  that  Government  must  be  a  free  agent :  and  no  such  one 
can  be  formed  if  we  extend  our  occupatfon  over  the( whole  or  the  greater  part  of  the  country.  That 
free  agency  is  the  only  guaranty  that  the  United  States  want  for  a  solid  and  real  peace.  A  treaty 
made  under  duress  would  be  but  the  phantom  of  a  peace. 

But  the  Administration,  in  order  to  attain  the  object  they  have  in  view,  ask  for  more  men  and 
money.  It  must  be  admitted  that  the  army  which,  under  General  Scott,  after  a  series  of  extraordi 
nary  victories,  penetrated  into  the  heart  of  the  Mexican  dominions,  aiid  took  possession  of  their 
metropolis,  was  apparently  incompetent  for  such  a  bold  enterprise;  and  that,  with  a  greater  force  the 
success  would  have  been  more  certain,  and  attended  with  a  less  lamentable  loss  of  men.  But  it  is 
nevertheless  true  that  an  army  of  less  than  ten  thousand  effective  men  did  perform  that  wonderful  work, 
defeated  forces  three  times  as  numerous  as  themselves,  defended  by  fortresses  and  strong  positions, 
and  annihilated  or  dispersed,  all  the  troops  of  the  enemy  ;  and  now  that  our  effective  force  from  Vera 
Cruz  to  Mexico  has  been  more  than  doubled,  and  that,  with  the  exception  of  some  miserable  guerrillas, 
there  is  no  enemy  to  encounter,  the  number  of  troops  authorized  by  law  is  declared  to  be  insufficient, 
and  fifty  thousand  regulars,  with  a  reserve  of  twen  y  thousand  volunteers,  are  said  to  be  necessary,  in 
order  to  occupy  that  which  has  been  conquered,  and  to  extend  that  occupation  over  a  greater  extent  of 
territory.  The  only  avowed  object  is  to  conquer  peace  ;  but  would  not  this  course  inevitably  lead  to 
that  subjugation  and  annexation  for  which  the  war  party  is  so  anxious  ? 

This  magnificent  plan,  whether  effected  by  the  annihilation  of  the  native  population  or  by  enslav 
ing  it,  will  promote  their  welfare,  and  is  also  called  a  pacification.  "Ubi  solitudinem  (seu  servitutem) 
faciunt,  pacera  appellant."  But  if  this  extravagant  project,  suggested  by  the  most  unbounded  ambi- 


13 
\ 

tion,  should  be  carried  into  effect,  I  will  not  simply  say  that  it  would  inflict  a  mortal  wound  on  onr 
institutions — I  assert  that  it  would  break  down  our  own  Union  into  separate  communities,  and  de 
stroy  our  nationality. 

For  the  object  avowed  by  the  Administration  there  is  not  the  slightest  necessity  to  increas?  the 
number  of  troops  now  authorized  by  law.  The  only  effect  would  be  to  perpetuate  a  large  standing 
army ;  to  increase  indefinitely  the  Executive  patronage,  and  to  appoint  greedy  proconsuls  over  the 
several  Mexican  Departments  which  might  be  occupied. 

I  cannot  understand  the  policy  of  those,  who,  originally  opposed  to  the  annexation  of  Texas,  and 
to  this  moment  decidedly  averse  to  conquest,  are  of  opinion  that,  simply  because  we  are  at  war,  we  are 
bound  to  adopt  the  views  of  the  President,  to  sustain  him  in  his  course,  and  to  grant  him  all  the  rrioney 
and  all  the  men  he  requires.  Every  one  has  undoubtedly  the  right  to  act  according  to  his  own  notions 
of  right  and  wrong,  and  I  only  claim  the  same  privilege  for  myself.  But  let  it  be  recollected  that 
this  is  not  a  question  of  money  alone.  The  President  asks  formore  men.  Very  lately  new  regiments 
of  volunteers  have  been  called  for  and  marched  to  that  country,  where,  exclusively  of  those  who  may 
fall  in  battle,  the  climate  alone  destroys  a  frightful  proportion  of  the  natives  of  the  United  States 
who  are  subject  to  the  ordinary  fatigue  and  duties  of  a  soldier.  Read  with  attention  the  reports  of 
the  Adjutant  General,  and  the  daily  accounts  of  the  losses  in  special  corps  ;  and  you  will  be  satisfied 
that  this  loss  is  not  less,  for  the  first  year,  than  the  'sacrifice  of  one-fourth  part  of  the  men  you  are 
coolly  asked  to  grant  to  the  Administration.  And  for  what  purpose  I 

It  has  already  been  stated  that,  as  no  money  can,  according  to  the  Constitution,  be  drawn  from  the 
Treasury  but  in  consequence  of  appropriations  made  by  law,  the  statement  of  the  Secretary  of  the 
Treasury  shows  only,  under  the  head  of  expenditures,  the  amount  paid  by  him  for  the  several  depart 
ments,  which  never  can  exceed  the  amount  appropriated  by  law  for  each  service.  The  question  has 
often  been  agitated,  whether  the  disbursing  departments  had  the  right,  for  defraying  the  expense  in 
cident  to  an  object  authorized  by  law,  to  expend  more  than  the  money  appropriated  for  such  object. 
This  is  a  question  altogether  distinct  from  that  of  specific  appropriations  respe3ting  which,  it  had  been 
contended  that  moneys  appropriated  for  one  object  authorized  by  law  might  be  diverted  to  another 
object  likewise  authorized  by  law.  In  this  case,  even  if  this  construction  had  b?en  admitted,  the 
total  amount  expended  could  not  have  exceeded  the  total  amount  appropriated.  But  in  the  case  now 
under  consideration,  the  question  is,  whether  the  disbursing  departments  can  expend  more  than  the 
total  amount  of  appropriations.  And,  as  the  Treasury  never  pays  them  more  than  that  amount,  it  is 
clear  that,  if  more  is  expended  by  any  department,  it  must  fall  in  debt  for  the  difference.  An  ap 
plication  for  deficient  appropriations,  or  arrears,  is  then  made  to  Congress  ;  and,  as  the  debt  has  been 
incurred,  the  necessary  appropriation  is  never  refused,  if  the  money  has  been  honestly  disbursed  and 
accounted  for.  The  extent  to  which  the  expense  incurred  may  exceed  the  appropriation  is  exhibit 
ed  in  the  following  sentence,  in  the  report  of  the  Secretary  of  War  : 

"  The  Department  has  presented  estimates  for  considerable  deficiencies  in  some  of  the  war  ap 
propriations  for  the  current  fiscal  year.  Provision  was  made  in  these  appropriations  for  continuing 
in  service,  besides  the  regular  troops,  then  thousand  volunteers  ;  but  it  was  subsequently  deemed 
important  greatly  to  augment  this  volunteer  force.  The  excess  of  volunteers  called  out  beyond 
that  number  is  over  fifteen  thousand,  for  which  no  appropriation  was  made." 

Whether  the  practice  be  correct  or  not,  it  is  publicly  avowed  ;  and  it  follows  that  Congress  must 
not  act  under  the  belief  that  the  actual  expense  is  regulated  by  the  amount  appropriated.  It  is  a 
positive  fact,  that  whenever  it  does  authorize  any  one  object  of  expenditure,  the  practical  power  of  de- 
terming  the  actual  expense  which  shall  be  incurred  will  be  determined  by  the  Head  of  the  Depart 
ment.  It  is  therefore  absolutely  necessary,  whenever  an  additional  object  of  expenditure  is  recom 
mended,  previously  to  examine  critically,  and  without  much  regard  to  estimates,  generally  underrated, 
what  the  actual  expense  will  amount  to. 

Yet  the  framers  of  the  Constitution  thought  otherwise  ;  for,  when  it  was  enacted  by  the  Constitu 
tion  that  "  the  Congress  shall  have  power  to  raise  and  support  armies,  but  no  appropriation  of  money 
to  that  use  shall  be  for  a  longer  term  thnn  two  years,"  it  was.  clearly  intended  to  prevent  the  danger 
of  large  standing  armies,  and  not  less  clearly  implied  that  armies  could  not  be  supported  constitution 
ally  without  an  appropriation  to  that  use.  The  framers  of  the  Constitution  anticipated  the  danger, 
and  provided  the  constitutional  remedy. 

Indeed,  in  every  representative  Government,  wherever  a  certain  share  of  power  is  enjoyed  by 
the  people,  it  is  that  over  the  purse,  which  has  ever  been  deemed  the  most  impprtant.and  of  itself 
almost  sufficient  to  prevent  excessive  oppression.  To  this  day,  in  England,  in  France,  and  in  every 
other  country  in  which  a  representative  form  of  Government  has  been  introduced,  it  is  by  far  the 
most  substantial  and  efficient  attribute  of  the  popular  branch  of  the  legislature.  It  is  true,  that  in  Eng 
land  the  power,  though  claimed  to  its  fullest  extent, is  very  rarely  exercised.  Amilder  practice  has  pre 
vailed.  Wher.evei'a  truly  important  question  is  decided  in  the  House  of  Commons  against  the  Ministry, 
the  king  must  either  dissolve  the  Parliament  and  appeal  to  the  people,or  yield  to  the  will  of  the  majority 
of  the  House.  It  was  in  this  way  that  the  obstinacy  of  George  III.  was  conquered,  and  an  end  put 
to  the  war  waged  by  Great  Britain  against  the  independence  of  the  United  States.  But  our  elective 
monarch,  for  the  very  reason  that  he  is  elected  by  the  people,  is,  during  his  brief  term  of  office,  more 
powerful  than  the  British  King,  and  would  not  probably  be  deterred  from  his  course  by  a  mere  decla 
ratory  resolution,  such  as  was  that  moved  by  General  Conway  in  the  House  of  Commons.  He  has, 
indeed,  by  his  own  act,  and  without  having  consulted  Congress,  placed  the  country  in  a  state  of  war. 


14 

Thifi  having  been  effected,  neither  of  the  two  Houses  of  Congress,  nor  both  together,  are  vested  with 
any  constitutional  power  of  compelling  him  to  make  a  peace,  or  even  to  open  negotiations  for  that 
purpose.  There  is  no  other  efficient  constitutional  power  by  which  he  can  be  checked  but  that  of 
withholding  supplies  to  the  extent  necessary  for  effecting  the  intended  purpose. 

POSTSCRIPT. 

FEBRUARY  1,  1848. 

This  essay,  with  the  exception  of  the  estimates  for  the  years  ending  respectively  30th  June,  1848 
and  1849,  and  of  some  verbal  alterations,  was  written  within  the  month  of  December.  Its  publica 
tion  was  postponed  in  the  hope  of  obtaining  more  correct  information  respecting  the  estimates  of 
receipts  and  expenditures  contained  in  the  second  section  of  the  essay.  I  wanted  specially  copies 
of  the  tables  A  and  B  therein  alluded  to.  It  has  no^  been  printed  ;  and  it  is  only  this  day  that  I 
have  received  the  copy  of  the  annual  report  of  the  Secretary  of  the  Treasury  on  the  state  of  the  finan 
ces,  addressed  to  the  House  of  Representatives.  From  this  I  have  extracted  the  substance  of  the 
tables  in  question,  which  will  explain,  in  that  respect,  the  deficiencies  in  the  text. 

In  the  mean  while,  an  incident  has  taken  place  which  would  seem  to  derange  all  the  calculations 
made  respecting  the  amount  of  the  loan  wanted  at  this  time,  which  were  founded  on  the  Report  of 
the  Secretary  of  the  Treasury  to  the  Senate.  We  are  now  informed  that  there  was  an  omission  in 
that  report  of  four  items,  amounting  together  to  $6,915,078,  the  receipts  for  Treasury  notes  and 
loans  which  had  been  disposed  of  during  the  quarter  ending  September  30, 1847  :  whence  the  acting 
Secretary  of  the  Treasury  concluded  that  a  loan  of  only  eleven  or  twelve  millions  of  dollars  would 
be  wanted. 

It  appeared  extraordinary  that  the  Secretary  of  the  Treasury,  who  was  indeed  seriously  indisposed. 
at  the  time  of  his  report,  should,  on  an  aggregate  of  thirty-three  millions  of  notes  and  loans  author 
ized  by  law,  find  himself  near  seven  millions  richer  than  he  thought. 
In  his  report  aforesaid  he  reckons,  among  the  receipts  for  the  fiscal  year  ending 

June  30,  1847,  the  following  sum  from  avails  of  Treasury  notes  and  loans $25,679,199  45. 

And  he  states,  as  the  still  available  amount  from  Treasury  notes  and  loans  on  1st 

October,  1847,  the  sum  of. 6,285,294  55 


Together $31,964,494  00 

If  to  this  be  added  the  four  items  of. 6,915,078  00 


The  total  would  amount  to $38,879,572  00- 

or  near  six  millions  more  than  authorized  by  law,  which  is  impossible. 

•  This  must  be  explained.  But,  until  the  explanation  shall  have  been  given,  it  is  very  clear  that  the 
Bum  of  $5,879,572,  being  the  excess  of  the  apparent  receipts  and  amount  still  available  from  Treasu 
ry  notes  and  loans,  beyond  the  amount  authorized  by  law,  must  be  carried  to  the  other  side  of  the- 
account. 

If,  therefore,  adopting  all  the  other  statements  and  estimates  of  receipts  and  expenditures,  as  given 
by  the  Secretary  of  the  Treasuey  in  his  original  report,  he  is  credited  with  the  four  omitted  items, 

amounting  together  to $6,915,078 

He  must,  on  the  other  hand, be  debited  with  the  excess  aforesaid,  amounting  to 5,879,572 

Making  a  difference  in  his  favor  of. $1,035,506 

So  that  it  would  appear  that  the  loan  wanted,  instead  of  being  reduced  near  seven  millions  below 
the  original  estimate,  would  be  only  lessened  little  more  than  one  million.  I  am  very  far  from  *aying 
that  this  is  the  fact,  but  only  that  it  is  the  apparent  result,  until  the  subject  shall  have  been  investiga 
ted  and  explained. 

It  appears  also  to  me  that  there  is,  among  the  various  documents  appended  to  the  report,  a  want  of 
precision  in  the  expressions  used,  and  particularly  in  the  words  redeemed  and  reimbursed. 
'  The  Secretary  of  the  Treasury  is  permitted  to  reissue  notes  only  in  lieu  of  those  which  have  been 
actually  redeemed  and  reimbursed.  And  these  terms  do  not  at  all  include  the  amount  of  notes  which 
have  been  converted  into  stock ;  since  it  is  most  expressly  provided  that  the  aggregate  amount  of  Trea 
sury  notes  and  stock  shall  never  exceed  the  sum  of  thirty-three  millions  of  dollars.  There  are  but 
three  descriptions  of  notes  that  are  actually  paid  and  reimbursed,  and  in  lieu  of  which  the  Secretary 
has -a  right  to  reissue  new  notes:  1st,  such  as  may  have  been  purchased  by  the  Secretary;  and  the 
acting  Secretary,  in  his  report  of  December  13, 1847,  to  the  Senate,  states  that  none  have  been  thus 
purchased  ;  2dly,  those  which  may  have  been  paid  in  payment  of  duties,  taxes,  and  other  debts  to  the 
United  States ;  3dly,  those  which,  coming  to  maturity,  are  actually  paid  and  reimbursed.  Of  this 
last  class,  there  can  as  yet  be  but  few  that  have  already  become  payable,  since  none  were  issued  paya 
ble  at  a  shorter  date  than  one  year,  and  the  first  law  authorizing  the  issue  was  passed  on  the  22d  July, 
1846. 

I  do  not,  therefore,  understand  what  is  meant  in  the  table  A,  by  the  following  item  : 
Redemption  of  Treasury  notes,  deducting  $3,103,200  which  were  funded  under  the 

act  of  January28,  1847 $2,361,397  07 

Nor  in  table  B,  the  item — 
Redemption  of  Treasury  notes  and  interest , $2,385,329  63- 


15 

There  have  been  no  such  amounts  of  Treasury  notes  paid  in  payment  of  duties  and  debts  to  the 
United  States,  or  which  have  come  to  maturity  and  been  paid  oft'. 

The  same  remark  applies  to  some  other  statements,  such  as  that  (M)  of  reimbursement  of  Treasury 
notes  from  December  1, 1846,  to  December  1, 1847,  amounting  together  to  $8,971,791  66. 

In  all  those  cases  it  is  clear  that  Treasury  notes  are  included  which  have  not  been  reimbursed,  but 
converted  into  stock. 

On  the  other  hand,  the  Register  of  the  Treasury  has,  in  the  statements  of  the  public  debt,  (F,,)  and 
of  the  amount  available  on  1st  December,  1847,  (H,)  given  a  very  perspicuous  and  satisfactory  state 
ment  of  the  situation,  on  the  1st  December,  1847,  of  the  thirty-three  millions  of  Treasury  notes  and 
debts  authorized  by  law : 

Loans  of  1846 $4,999,149  45 

Do        1847 9,173,772  00 

$14,172,921  45 

Outstanding  Treasury  notes  of  1846 984,750 

Do.  do.  1847 13,639,500 

14,624,250  00 

Amount  available  under  act  of  1846 902,950  55 

Do.          do.         act  of  1847 3,299,87800 

• 4,202,828  55 


$33,000,000  00 


The  aggregate  of  loans  obtained,  and  of  outstanding  Treasury  notes,  is  thus  pre 
cisely  ascertained,  and  amounts  to $28,797,171  45' 

But  according  to  the  estimates  from  which  the  amount  of  the  necessary  loan  is  de 
duced,  the  avails  of  loans  and  Treasury  notes,  during  the  year  ending  30th  June, 
1847,  amounted  to $25,679,199  45 

And  those  during  the  quarter  ending  30th  September,  1847 6,915,078  00 


Together 32,594,277  45 


Making  a  difference  of. $3,797,106  00 

Which  seems  to  prove  decisively  that  there  is  somewhere  an  error  in  the  estimates  or  calculations, 
and  that  a  loan  several  millions  of  dollars  greater  than  has  been  asked  was  wanted. 

It  will  be  seen  by  the  table  A  that  the  war  expenses  of  the  year  ending  June  30,  1847,  under  the 
heads  of  "  Army  proper"  and  "Mexican  hostilities,"  amounted  to  $36,246,360  94,  which  is  beyond 
the  amount  that  I  had  estimated. 

Notwithstanding  the  difficulty  of  explaining  the  statements,  from  which  the  inference  has  been 
drawn  that  the  loan  might  be  reduced  to  twelve  millions,  the  Secretary  of  the  Treasury  appears  to  be 
satisfied  for  the  present  with  that  sum .  In  the  meanwhile,  the  Secretary  of  War  has  applied  for  a 
further  appropriation  of  four  millions  of  dollars,  almost  altogether  on  accouut  of  the  arrears  which  had 
been  announced  by  the  Paymaster  General.  The  loan  now  asked  amounts,  therefore,  to  sixteen  mil 
lions.  A  sum  of  about  four  millions,  for  deficiencies  in  the  estimates  in  the  Quartermaster  General's 
department,  will  most  probably  be  wanted.  And  Congress  must,  before  they  adjourn,  provide  for  the 
expenses  of  the  last  six  months  of  the  calendar  year,  1843.  That  a  further  loan  will  be  wanted  in  the 
course  of  this  year  is  most  certain.  I  do  believe  that  no  greater  service  can  be  rendered  to  the  Ad~ 
ministration  than  by  refusing  to  grant  any  increase  of  troops. 

We  are  as  yet  in  a  sound  state.  The  country  is  in  a  flourishing  situation.  The  Mexican  war  alone 
arrests  or  impedes  the  indefinite  progress  of  the  further  improvement  and  prosperity  of  the  United 
Statea. 


16 

TABLE  A. — Receipts  and  Expenditures  of  the  year  ending  June  30,  1847. 

The  receipts  are,  as  in  the  report $61,152,428  90 

[But  the  total  amount  of  the  expenditures  was  alone  given.] 
The  details  are  as  follows : 

Civil  list,  foreign  intercourse,  and  miscellaneous $6,715,854  9S 

Army  proper $17,8811.842  91 

Mexican  hostilities 16,001,226  42 

$33,882,069  33 

All  other  expenses  of  the  War  Department 7,399,537  29 

41,281,606  62 

NAVY  DEPARTMENT. 

Mexican  hostilities $2,364,291   61 

All  other  expenses 5.567,342  07 

7,931,633  68 

PUBLIC  DEBT. 
Redemption  of  Treasury  notes,  deducting  $3,193,200,  which  were 

funded  under  the  act  of  January  28,  1847 $2,361,397  07 

All  other  expenses  of  public  debt 1,160,685  30 

__1 3,522,082  37 

59,451,177  65 
Balance  in  the  Treasury  1st  July,  1847 1,701,251  25 

$61,152,428  90 

TABLE  B. — Receipts  and  Expenditures  for  the  year  ending  June  30,  1848. 

RECEIPTS. 


First    quarter,  I  Last  3  quarters, 
ascertained.  estimated. 


Total. 


Customs  

Dollars 
11,106,257 

896,883 
58,533 

DolUfM' 

41      19,893,742 
47  i     2,603,116 
47           341,466 

Jjollars. 
59      31,000,000  00 
53        3,500,000  00 
53           400,000  00 

Lands 

Miscellaneous             ... 

Treasury  notes  and  Loans  .  

12,061,674 
6,915,078 

35     22,838,325 
00       6,285,594 

65 
55 

34,900,000  00 
13,200,372  55 

Balance  in  the  Treasury  July  1    1847 

18,976,752 

35 

29,123,620 

20 

i  48,100,372  55 
1,701,251  25 

19,801,623  80 

EXPENDITURES. 

1,116,680 
8,717,583 
1,853,108 
2,384,805 
2,385,329 
11,687 

44 
60 
08 
45 
63 
49 

5,486,180 
19,080,865 
4,820,630 
10,241,072 
267,139 
2,250,577 

42 
58 
42 
47 
31 
18 

6,602,860  86 
27,798,449  18 
6,673,738  50 
12,625,877  92 
2,652,468  JF4 
2,262,264  67 

Army  proper 

Other  war  expenses 

Navy..  .       

Redemption  of  Treasury  notes  and  loans  
Other  payments  for  public  debt     

Deduct  total  means  as  per  above     .  . 

16,469,194 

69 

42,146,465 

38 

58,615,660  07 
49,801,623  80 

Excesi  of  expenditures 

8,814,036  27 

Nothing  can  show  more  clearly  how  delusive  these  estimates  were  than  the  fact  that  a  loan 
of  sixteen  millions  is  actually  wanted,  and  that  the  probability  of  this  being  insufficient  amounts 
almost  to  a  certainty. 

CORRECTION. 

In  the  estimate  of  Expenditures  for  this  year,  the  appropriation  on  account,  made  by  act  of 
December,  1847,  was  one  million  of  dollars,  and  not  four  millions,  as  inserted  in  the  text. 


Printed  by  JOHN  T.  TOWERS,  opposite  National  Intelligencer  Office,  at  $lper  100. 


